South African brewer SAB Miller and its gambling joint venture partner Tsogo Investments are pooling their hotel and gaming interests in what they call the most important empowerment deal yet in the hospitality sector.

I know that the new company going forward will create many new opportunities for South Africans Valli Moosa, Tourism minister

The new company, the largest of its kind in South Africa, will be 51% controlled by black-owned Tsogo.

The 1.9bn rand deal should be complete early in 2003, the two said in a statement.

SAB Miller said the deal would fulfil its obligations on empowerment and allow it to continue hiving off non-core operations.

Apartheid's legacy

The group will include Southern Sun Hotels - the largest chain in the country, currently 100% owned by SAB Miller.

It will also incorporate 50% of the casino operator Tsogo Sun.

The SAB Miller-Tsogo deal is one manifestation of South African business's response to government policy on widening ownership.

Most of South Africa's leading firms remain predominantly white-owned, a legacy of the apartheid years.

Boosting tourism

Government policy is to widen black ownership as part of its economic empowerment programme.

The mining industry recently came to an accord ensuring 15% of mining firm shares would be in black hands - or at least owned by companies such as Tsogo set up to encourage empowerment - within five years.

Firms pushing forward empowerment can expect favourable treatment when seeking government contracts and licences.

"I know that the new company going forward will create many new opportunities for South Africans and help to expand the tourism industry in this country," said tourism minister Valli Moosa in a statement.

Tourism is a key industry for South Africa, and the government is hoping it will help sustain economic growth.